Plans put disability insurance in reach
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Yet fewer than 30 percent of U.S. workers have any form of long-term disability coverage, according to the Bureau of Labor Statistics and AARP.

Employer-sponsored disability plans typically only cover up to 50 percent of your paycheck. How long could you live on half-pay? Yes, Social Security disability benefits kick in after a year and last until death, but to qualify, you must be unable to engage in any type of work.

So why don't we buy disability insurance? Purushotham says we typically say we can't afford it, when what we really mean is we're not sure we need it.

"The big problem with disability insurance is that people, especially young people, aren't aware of their risk of suffering a disability and that you can insure against it," she says. "A lot of people are aware of the idea of life insurance, but many middle-market people don't know there is a disability product they can buy."

There's also a distribution issue surrounding disability insurance. These are complex policies that don't lend themselves to easy side-by-side comparisons in the same way as, say, term life policies. Disability is a less standardized product than some other forms of insurance. This makes shopping for a good policy more complicated. Coverage typically only applies if you are under a doctor's care, cannot work and have a loss of income, and many companies have strict guidelines for determining what the policy does and does not cover. For this reason, experts urge people to read policies carefully before purchasing them. 

Individual disability insurance policies historically have been marketed to highly paid specialists such as surgeons and engineers. Consequently, many insurance agents are reluctant to spend the time it takes to sell them and would be even less likely to do so if the costs -- and their commissions -- were reduced.

"They are confusing. Even term (insurance) can be confusing," Purushotham says. "When you add on disability elimination periods and benefit periods, it gets confusing real fast."

But a few insurers believe they've found a natural opening: your front door. What caught their attention? Possibly this nugget from the National Safety Council: Half of all foreclosures on conventional mortgages are due to a homeowner becoming disabled.

"The idea was that they would market (life-disability insurance hybrids) to people who were just going out for life insurance for the first time to protect their mortgage," Purushotham says.

Elements life-disability insurance hybrids have in common:

• Term life base with disability insurance rider. • Modest maximum monthly disability insurance benefit (between $300 and $3,000). • Elimination, or waiting, period: 90 days. • Disability insurance benefit period: 18 months to three years. • Limited additional underwriting, often based on the rate class of the term portion.

Though it is virtually impossible to do an apples-to-apples comparison on these policies, Purushotham says one hybrid quote she obtained for a 45-year-old male offered a $250,000 death benefit (the term life portion) and a maximum $1,800 per month disability payment (the disability insurance portion) for an annual premium of $850. Disability payments are tax-exempt, an added plus.